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Worldwide Exchange

News/Business. Brian Shactman. Business news including in-depth analysis of worldwide trends.

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U.s. 58, France 28, Us 22, China 18, Germany 18, Europe 13, Christine 10, America 8, Bob Mckee 7, Citi 7, Bertha 6, Shanghai 6, Eric 5, Harrington 5, New York 5, India 5, Tokyo 5, London 5, Walmart 4, Moody 's 3,
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  CNBC    Worldwide Exchange    News/Business. Brian Shactman. Business news  
   including in-depth analysis of worldwide trends.  

    August 13, 2009
    4:00 - 6:00am EDT  

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i'm with the with the. in asia, many markets are higher. risk appetite is back after the fed suggests the worst could be over for the world's number one economy. >> i'm ross westgate in europe. the recession is over in europe and germany as the two post surprising numbers in gdp. >> i'm bertha coombs in the u.s. the retail sector is in focus today as walmart posts second quarter results. hello and welcome to cnbc's "worldwide exchange." so global equities trying to be firmer.
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the ftse cnbc 300 is up 21 points. we managed to get a positive close in wall street. european stock markets had a bit of a boost here this morning with the growth numbers out of france and germany. we're going to get the eu whole number coming out in a while. the ftse 100 up 0.8% as well as the xetra dax. cac 40 up 0.7% and smi up 0.5%. what happened this morning, the growth dmeft irk numbers up 0.3% in germany. it's down on a comparative basis, 7.1% less than where we were standing for growth a year ago. but quarter on quarter, it was positive. that helped the euro extend some gains against the dollar this morning. euro/dollar up to 1.4245. dollar is firmer against the yen and sterling rebounded, as well against the greenback. >> those upbeat comments from
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the fed gave markets here enough region to cheer. markets gaining higher in asia, for instance, the nikkei 225 up 0.8%. the kospi marginally lower. shanghai composite up 0.9%. hang seng up 2.07%. this market tracks closely what happens in the u.s. and the bombay sensitive 30 index up 2.5%. crude oil seems to be getting a lift on the upbeat comments coming from the fed. nymex light sweet crude up 86 cents, $71 even, and brent is putting on gains on hopes demand will pick up, $74.20 a barrel. bertha. >> good morning, christine. we are seeing the futures point up here, on the back of the fed saying they believe the end of the recession is near.
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bank of america right now up about 44 points above fair value. nasdaq futures up about 9 and s&p futures up about 5.5. taking a look at bonds this morning, bonds yesterday rallying on the back of that fed news. taking a look at the ten-year bund. doesn't look like that was going to come up, at least -- all right. we'll give it a little time. and the yield here is moving to 3.48% on the back of some of that german gdp data. and taking a look at the ten-year note here, the ten-year auction did not go well. some of that could be written off to people waiting to hear what the fed has to say. the fed said it is going to
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extend quantitative easing, but only for a month. gold is up about 0.6%. >> germany and france are out of the recession. the two economies unexpectedly returned to growth in the second quarter. german gdp grew for the first time since early 2008. up 0.3% from the previous month. that compared with contraction as much as 0.3%. even the country's finance minister said the figures are very surprising. what are investors to make of this news? joining us is manford gill and virginia. after the earnings season, this news is obviously surprising. is it another catalyst for investors to buy stock, to add more risk for the portfolio? >> well, i think that's the news we just had today is the reason
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why the markets have been up since march. markets have been up because we were expecting a cessation of the numbers. >> no one thought we were going to get positive numbers today. >> that's the direct. and what you can see is the third and fourth quarter last year were very bad quarters, so the base effect is going to be very positive. what i'm looking at, i'm saying, okay, that's fine. that's part of the end of the recession, if you want, but the next step is where is final demand? so if we look at first half of 2010, and i think that's what the markets increasingly are going to be looking at is final demand after the big inventory movement that we had or that we're having going to actually come up or stag nate. >> you want to say this is surprised in? >> i think part of it is priced in, i think you're right. but i think part of it is why
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the markets, since march, have been up. another part of why the markets have been up is basically because liquidity was so high. so those two elements means t t that, you know, we could focus on demand now. >> quarter on quarter we were positive. when you look at the year figure, growth in germany is still down over 7%. you know, the actual amount of growth in the economy is down over 7% from where it was a year ago. >> in our view, this data is very consistent with the trend we've been seeing in macroeconomic data throughout. the data has improved. it's less worse than it was before. but in absolute level, with it hasn't reached the point where we can say we're back into growth and recovery. i think right now it's positive enough news that the data has
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been surprising on the up side, it's been surprising elsewhere in the world, here in asia, and in europe. and our expectation is that this is an upside surprise. we'll see an increasing amount of as we move into the second half of this year and confirms that we are at least heading into a recovery even if it's a moderate one. >> manfreed, expanding what virginie was talking about, one could argue that this recovery has been propped up by stimulus and inventory restocking. where does the consumer, and particularly the u.s. consumer, and today we're going to get a snapshot of what the u.s. consumer is up to in july, if the consumer doesn't step up, is this sustainable? >> i agree. that's the most important question going ahead and that's what we see as the biggest risk. in the early part of the recovery, we're seeing restocking being the support is only to be expected.
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what will make this recovery sustainable is if this translate down to private sector demand. sitting here today, our expectation is that this transition will be sustainable. but that's the transition we need to see and i think that point of transition is what we need to look out for and be clear on what the risk is. >> virginie, what about you? where will the consumer demand come from? is this a chance that perhaps asia couldake up what doesn't happen in the eu and the u.s.? >> i think it's very clear for us that, you know, along with the long trends that we've liked for quite a few years now that are unraveling nicely, climate change, demography and super cycle, which is the rule of emerging markets in the global economy, i think what we're seeing is a confirmation that the emerging market consumer in general is in a much better shape than the western
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consumers. and we see that as really the engine of growth continuing going forward. so brazil, china, incident ya, becoming increasingly important. interestingly, if you look at the developed economies and what savings rates have done, we've all known that savings rates in the u.s. and in europe in particular are still mentding themselves the when in japan they've actually halved, i think it's going to be very tough for this developed world and the engine of growth will continue to come from a consumer spending standpoint from emerging market. so what we're looking at, again, is are things going to get much worse from here? and that's where i say i think we are in a plateauing or a better environment but we should not expect very strong growth from developed market or consumer going forward. >> virginie, just to clarify, so
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you think emerging markets can lead the whole world into a recovery, is that what you're saying? >> i think it depends specifically on what you're talking about. remember back in the '90s, china was only 5% of global commodities demand and now it's about 45%. if we talk about consumers, if you look at the spending power and look at urbanization, numbers are staggering if you look at dmis, urban population today of u.s. plus china is about 30%. if you look at 40 years down the line, china and india will be above that. so you have an enormous structure taking place and, therefore, a strong engine of growth. clearly, if the u.s. consumer was going to collapse again, i don't think the chinese, indian, brazilian consumer would be able to compensate. but if we have a stabilization,
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as i believe we will have in the western economies, i think that the marginal call is going to be on the emerging economies and i think that's the engine of growth. >> manford, what do you think? to believe what virginie said makes you think asia can decouple with what's going on in the rest of the world. >> i have to agree with her to a larger extent. the asian consumer is becoming more important. but the absolute numbers don't show it. it shows an increasingly large consumer. but we need the situation where the u.s. consumer does recover to at least a moderate extent. i don't think complete decoupling is a possibility. >> mamprett gill, thank you, thank you, virginie, as well. >> thank you.
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west lb is refusing to comment on suggestions and reports that it will be the first german lender to use the country's bad bank scheme. the reuters news agency says the german lender's bank has applied to the government to transfer 6.4 billion euros into toxic assets into a bad bank by the end of september. >> ross, australia's quarterly reported better than expected full year earnings thanks to broadband earnings. profit for the year to june rose to $3.4 billion compared to just over $3 billion the year before. sales saw a 2.7% gain to $21.3 billion. as for the current fiscal year, telstra remains cautious citing ongoing negotiations with the australian government on its planned project as well as weaker economic conditions. >> yeah. we had very strong results,
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despite the economy. but we don't see the economy coming back quickly. that's why we're cautious. and i think probably appropriately so. that means we're going to manage costs carefully and not get too far ahead of ourselves. we're still saying revenue growth and profit growth but just in the lowest single dij gains. >> and shares of telstra lost 1.4% in sydney today at 3.56. >> walmart reports seconder quarter earnings at 7:00 a.m. new york time. it's forecast to match year ago results. analysts have cut estimates to account for falling food surprises and tough comparisons with last year when consumer spending was boosted by tax rebate checks. but walmart is still benefiting from bargain hunting shoppers. the stock, though, hasn't benefited. it's down 10% year-to-date. july retail sales are due out at 8:30 a.m. new york time,
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forecast to rise by 0.8% thanks to the cash for clunkers related auto sales program. ex autos, sales are expected to have only risen about 0.1%. citigroup is reportedly hired consultant toes perform an in-depth review of the bank's market. the financial times says the move is being spearheaded by the fdic. citi must present a plan of action on possible management changes to the board and regulators by the time it reports third quarter results in october. vickram pandit may not be sending sheila bair a christmas card this year. citi shares are up just over 4%. citi and other companies that haven't yet repaid their t.a.r.p. loans must submit executive pay plans to the government's pay czar today. ficht to check out what's been going on with citi and bank of
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america stocks or others or if there's anything you missed and want to check out, go on to cnbc.com. you can get up to date news there 24/7 wherever you are. coming up on "worldwide exchange," beware, the triple oou shaips shaped recovery. that's the new one. we're going to talk about it. deutsche bank's chief economist says the world is in trouble. we'll assess whether economic optimism is premature. 5,5,5,5,5,
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global equity markets are firmer today. we start off with james hughes, market analyst, cnbc markets in london. james, a little more positive again today. we've got good growth numbers out of germany and france and prudential in focus.
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>> yeah. i think the gdp numbers have boosted things in germany and france. of course, it's goc to be a blip were that to be continued. a few stock stories today, again, prudential, their numbers are doing well. these numbers look pretty good. there's a few worries over the dividend hike in there, just in the cash generation side of that. i think those numbers look pretty good. traders showing those good, as well. also had thomas cook, a lot of interest in that one this morning. despite what looks like good numbers on the face of it, the shares have dropped a little bit. this whole one up charges on the back of the swine flu outbreak and things like that which are not necessarily helping too much and that's dragging on the share price today. but really it is the gdp numbers. a lot of forever will be put this afternoon on the u.s. i think a lot will ride on
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exactly what comes out of those. >> yeah. is the buy still here, james, to buy on dips, do you think? yeah, i think so. i think this market is looking pretty -- i think the important part was when we rallied so strongly was how aggressive the sell-off would be after that. we didn't get too much of a sell-off. now that those levels are acting as a bit of support on this market, i think anything back to there, investors are looking at and pushing this higher again. i think we've still got the legs. and if we can hold on to the likes or keep above this 4.7 level, i think 5,000 is definitely on the cards. >> james, thanks for that. let's go from london to frankfurt and sill vijay, basking in growth. >> yes. we can't beat about the bush. there's no use talking down the numbers. they were good, better than expected and they surprised everybody, period. now that everybody is saying it's all priced in and we expected it all, it's all after
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the fact. i don't think there will be a blim, but there will be a long trudge out of this. as we move into the year, as there is a greater demand for liquidity, for finance, then we might head into a credit crunch scenario that many here in germany fear. and then we see what kind of problems we run into. aside from the gdp numbers, of course, we had a string of corporate earnings out. over q sells, tui, a whole string of them. rwe was better than expected and there were agricultural dull drums. but the numbers are pretty glum. talking about glum, tui numbers
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were glum. there's a lot of negative vibes. my guess is we'll hear about that very soon. they probably wouldn't want to comment on the application right now officially. but what we hear out of various places is indeed this application is on the table. we'll wait and see. that might open the dike for us. stephane and of course the franco german alliance works well. also bringing gdp numbers out of france. >> absolutely. we had a good surprise this morning. the french gdp increased by 0.3% in the second quarter. the average forecast was a decline of 3.0% and that explains the positive session we have on the french market. the price was due to consumer spending and due to strong ex
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ports which contributed almost 1% to the gdp number for the second quarter of this year. apart from this, we've got also some strong numbers from adp. the company posted almost a 6% rise in sales for the first half of the year despite a 6.4% decline of passenger traffic in the same period. the company maintained its guidance for the full year, expecting a slow but growth of its rough in 2009, thanks to higher fees and better savings per passenger in the duty free shops in the main paris airport. the stock is up and also air france klm is up 1% right now. the banking sector also is doing well today despite the latest comments from the budget minister. in a tv interview yesterday, it was called for tighter regulation in the banking sector to make sure that the banks are lending enough to companies and also to make sure that they are not paying excessive bonuses to
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a small number of employees. all the banks are in good shape today. now to singapore with saijal for a wrap on the asian markets. morning, saijal. >> good morning to you, ste pan. apart from the comments of the fed are helping to lift the asian markets here. big turn around from the losses we saw yesterday. i want to focus on greater china because a lot is coming out from there. first of all, the shanghai composite was lower earlier today, but it managed to recoup losses. we saw metal stocks and banking stocks gain. they were trying to calm fears about money tightening. that certainly helped the market. hong kong doing very well today. the hang seng index up 2%. h shares, as well, up about the same amount. rapid earnings coming out from that region and i want to start with leeann frang, which is a consumer export company. if you look at the net like, 1.4
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billion is where they came in on mark with consensus, slightly higher than what they reported last year. those numbers aren't bad because considering that they've been facing weak demand from the u.s. and also remember they had to deal with the insolvency from arcandor. i'm still watching the wires to see if they say anything about an outsourcing deal because some analysts were expecting that. property developmenter cheung long out, 11.5 billion hong kong dollars is where they came out. that's mainly because of lower contributions from hutchinson which reported today 33% lower on its first half net. it did beat forecasts and it says losses from 3g have been narrowing. that stock, though, up a nice 2.3%. now back to bertha in the u.s. >> thanks so much, saijal. here are u.s. retail sales and
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walmart's earnings will likely grab most of the earnings ahead of the bell. so weekly jobless claims are out at 8:30 ak new york time. the forecast is for a drop of 5,000 to a total of 545,000. also at 8:30, we get july import prices which are expected to have slipped by 0.11%. then at 10:00 a.m., june business inventories will be out, forecast to have fallen by 0.8%. in addition to walmart, we'll get results today from the likes of dr. pepper snapple, the former u.s. drink division of cadbury and retailerses take louder and kohl's to make you feel beautiful before the opening bell. after the close, we'll hear from nordstrom and auto desk. that is your global stock watch this morning. >> still to come on today's program, tiger woods has bounced back from missing the cut at the
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open to reassert his dominance. can he stay ahead of the pack at this week's u.s. pga championship?
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i'm christine tan. in asia, m&a and the resources sector china's yeung soul coal
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mining will acquire resources for close to $3 billion. >> and i'm ross westgate in europe. germany and france have posted surprising rises in quarterly gdp. >> and i'm bertha coombs. here in the u.s., the retail sector is in the spotlight today and walmart posts second quarter results. >> you're watching cnbc's "worldwide exchange." we'll add comments from the fed to those surprising growth numbers to france and germany and there's a little risk appetite in the market today. perhaps no surprise. the ftse cnbc global 300 is up 20 points. european stock market not up 1%, but nearly there. the xetra dax up 0.8, cac 40 up 0.6% and smi up 0.5%. we were looking for contractions of around 0.3%. euro/dollar is back up to
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1.4241. it was up to 1.42 this time yesterday. dollar/yen, firmer back up to 96.35 and sterling has reclaimed the 1.65 level. christine. >> ross, here in asia, the upbeat fed comments gave markets a boost in terms of sectors. we have technologies doing well, consumer related stocks doing well and financials doing very well, as well. in terms of markets, nikkei 225 up 0.8%. the kospi, managing to close moderately lower, shanghai composite up reversing earlier longs by 2%. and the bombay sensitive 30 index climbing 2.4%. bertha, overall, a very good session after what bernanke said in the u.s. >> yeah. and we're seeing follow through here as far as the u.s. futures. they are just a bit higher than they were half an hour ago.
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we've now got dow futures just about 60 points above fair value and the nasdaq about 9 points above and the s&p above. we are getting retail sales numbers ahead of the open and the weekly jobless claims, but that strong gdp number coming out of germany and coming out of france certainly giving aus boost here. taking a look at bonds, we have the third leg of this week's massive auction. today it's going to be $15 billion of 30-year notes. yesterday's ten-year didn't go so well, but that was an hour ahead of the fed's decision. a number of players might have been cautious about making the long bond ahead of the fed. right now, the ten-year yield at 3773% but moving higher because of more appetite for risk is what i'm trying to say, ross. >> yeah. if we got there, any idea.
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germany and france are out of recession. we turned to growth in the second quarter. gdp in dperm germany up for the first time in 2008. 0.3% from the first quarter. that's compared to the economists forecast for contraction of as much as 0.3%. precisely the same story in france, gdp there up 0.3%, as well. even the country's finance minister said the numbers are surprising. >> peter, you can't argue with these numbers. they are good. although it is worth pointing out that in germany's case, the growth in the second quarter this year is 7% weaker than the growth we had in the second quarter last year. >> yeah, okay. i suppose what the market is focusing on is the profile and as you pointed out, a massive surprise. not entirely sure exactly what that was. we await the breakdown of those
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numbers. my guess is we had a positive number from stock building and the drag in trade. overall, these nebs suggest that the economies have clearly turned the corner. it does vindicate the ecb's stance and the question is how strong will the economy be in the second half of the year. >> what do you think? >> pretty strong is my guess. companies which are slacked from inventories in the first few months of this year will start to rebuild them. my guess is that the second half of this year for the large parts of the euro zone could look pretty decent. i'd be surprised if that continues well into 2010. >> peter, what about the u.s.? we are going to see retail sales likely to be up thanks in part
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to that stimulus. are we going to be able to draft off the euro zone strength and maybe find some consumer strength here, as well. >> i think to some degree, the problems in the u.s. are rather different. i mean, i think the euro zone is partly at least a victim of cyclical circumstances whereas the u.s. recession is partly -- well, probably largely a structural problem. that said, i mean, the second quarter gdp figures out of the u.s. were reasonably surprising and, again, as the auto sector starts to give the economy lift, we'll see stronger numbers. i think the u.s. has probably reached a bottom and from here on in, it's expansion all the way. but in contrast perhaps to the euro zone, the problems in the united states are such that it will take quite some time before growth starts to get motoring
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again. >> that's essentially what the fed said yesterday, that we're leveling out, but it's going to be slow growth. did the fed make the right decision? what's your thought on extending the bond buying program and what do you see in the bond market, giving the reaction we had yesterday with the ten-year once the fed is out of buying there? >> the well, obviously, the fed doesn't need to do an awful lot. it's expanded the program slightly, but we're talking about duration rather than amount here. i think as far as the markets are concerned,he fed has given us sufficient indications that it will be drawing this program to a close over the next couple of months. and that will give markets time to prepare and subsequently, i don't think we're going to see a huge sell-off in markets. the fed is still a big buyer of treasuries, of course. but once that program tapers off
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rather than come to an abrupt halt, we'll see market yields probably grind higher, but it should be a fairly orderly transition. >> peter, hi. this is christine. who is going to order all the supply coming on to the market? will china pick up some of the slack? >> i guess they're going to have to be. there isn't any other buyer of last resort. china and japan together are the big two hopes for the treasury, that they will continue their buying pattern that we've seen over the course of the past tep years or so. as long as china continues to post big trade deficits, that is likely. however, my guess is that the over the next few years, the story won't be quite as strong as it has been, so perhaps the pace of treasury purchases might not be as happen yid as it has been which might be a problem for the u.s. treasury. >> peter, great talking to you. thanks very much for being with us.
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peter dixon, u.s. commerce bank securities. let's zoom in on asia's emerging economies. asean is meeting in thailand today. meanwhile, china's multibillion dollar investment agreement is expected to by finalized later on in the week. what will all this mean for the region's block? let's find out from our guest today. good to have you with us. >> thank you. >> this is a big break through, isn't it? with india and now with china. >> it is, i suppose. this is a block of economies where you have growing income with growing propensity to expand. everyone wants to expand services and the u.s. manufacturing is looking to see how they can tap into this. it doesn't make sense. you have india business minute
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or chinese businessmen or thai businessmen to look at how you can exploit the situation. >> could this regional packet between china and india and what happens with intraregion, could that somehow make up for what's lost elsewhere? >> still difficult. at the end of the day, there is global output itself. it's not as easy as it seems because at the end of the day, there are still interest groups which may perhaps block the. by the end of the day, i think over time it will be signed and there will be more open for everyone and hopefully that will create a lot more opportunity for businesses more south, east,
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west within the region itself. hopefully we have more on that to be a stimulus for growth within the asian block itself. >> looking more broadly at asia overall, you know, no one is talking so much about decoupling, but could it be that asia could spur the global recovery here? >> at the end of the day, you'll still have the key engine of growth and europe being the final demand for many of the product being manufactured in asia itself. so in asia, we don't have that kind of high propensity to spend from average household. they say the u.s. household itself. i don't think we will be looking at decoupling, but really what we could see is while the globe economy is growing at subpar rates, a lot of the growth perhaps may come from the economies within asia itself, maybely because the balance sheet of the household sector, government seconder, the private
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sector itself looks more healthy now. so if we get some degree of confidence and stability in the landscape, perhaps we will be able to generate some of the economic activity with generate economic growth. >> in the end of it, do you think there will be more? >> i think the next check will the in the fourth quarter. what we know from our channel check is that we are okay in the third quarter in terms of order, but we are not quite sure about what's going to happen in the fourth quarter because that will depend very much on whether businesses in europe, in the u.s. is stopping will order more or whether they're happy with what they're seeing now for the christmas period itself.
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so lower hinge on that coming through. we may have to step up and say, we're not seeing the kind of recovery in the u.s. and we may have to continue to do more in terms of lifting economic activities within the asian block itself. so to me, it will be a year later after that first round of government stimulus package that they will look to see whether they're going to increase spending or not. >> so a big question mark there. >> we're past the worst, but sustainability remains an issue. >> final demand, thank you very much. good to talk to you, as always. thank you very much for dropping by. let's zoom in on india and cross over to mumbai.
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ayesha faridi joins us. >> thanks for that, christine. the indian market belongs to the entire real estate pack, metals are holding up very well and the kind of bump up that we have seen in the commodity universe or rather the base metals market. so almost 2.7% in the green for the nifty right now. 4570 is back in the index. and it's actually the small cap universe which is really holding out. so a sign of the real estate and the metals universe, you have other sectors in the green. this is a whole lot talk about some sort of education policy that the government may be announcing. stim no confirmation on that. the entire sector is holding up very well. you've got a whole host of telecoms, gains of about 2.5% to
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% apiece. meantime, the nspci view closed yesterday and the entire power story closed yesterday. nhpc may be listing in about three odd weeks and the government may be announcing some sort of power reforms in the couple of days or something. so the entire power sector is doing well. with that, it's back to you. >> ayesha, thank you very much for that. >> now, it's golf's final major of the year. it tees off in a few hours. it's held in minnesota. tiger woods is the favorite, but may benefit the big hitters at a total of 7,674 yards. it's the longest in major championship history. so you're going to need the driver all the way around. but what are the odds? joining us is chris shilington.
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chris, good to see you. tiger woods and the holder, patrick harrington are playing in the same group together. what's the odds that the winner is going to come from their group? >> as always when tiger woods is playing, it's a ridiculously short price. tiger woods is 9 to 5 to win the u.s. pga come sunday night. the next person on the list is phil mickelson. harrington has been pushed out because we haven't seen much love from here. harrington has said he's in the process of building his swing. he may have gotten a little lucky last week and he said he's not quite there. and it is in harrington's mind a disadvantage to play with tiger woods for the first two rounds. in answer to your question, tiger woods seems to be the best play of those three. and wsh of course, there's plenty of challenges elsewhere.
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>> where is the smart money going? lee had a good final round, did well in the open. >> he's been knocking on the door. he knocked on the door at the u.s. open, as well. ross woods could have and should have won our open here. jim furick is another one people respect. he's around a 33 to 1 shot. a guy that had some positive hits in the moint is miguel and trading at around 40/42, there's been a lot of people selling on the spreads and backing him on the fixed odds. >> chris, it's bertha. i'm curious, when tiger is in the hunt, and in there at the
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end, very close the winning, the ratings here are also very much higher. i'm wondering whether he's a favorite to win that you see more people stepping up to bet or does it depress the activity? >> it's a very, very fine line, actually, that one. because if tiger gets a two-shot lead, everyone considers it job done. he doesn't really give up a lead. what you want from a punter's point of view is tiger just lurking, lurking one, two shots behind. so last weekend, we alluded to five in the tournament played last sunday where he beat harrington and he was lurking behind harrington by the last three holes and we saw increased revenues up 33% on what we would expect. tiger in his own entity playing in a tournament does increase revenues because simply more people bet. they got the money there last weekend. >> it's the last major of the
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year, of course, which is why the last shot for glory is how they tout this one, chris. how is golf generally fairing in terms of sponsorship and prize money? a lot of carmakers have been sponsored of tours n united states. how do you think they're going to fair next year? >> you can't say it's not going to be effective because that will be ridiculous. obviously, everyone has been affected. because of ghofl's clean living image, even though they've started doing drug testing on golfers, for whatever reason, i don't quite know and everyone has come through clean. it is a sport that has a very, very clean cut image. they have an attractive group. what they will do is put into the quality market and golf is
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certainly one of those. so i think it will stand up better than most. >> chris, good to see you. >> don't you just love how ross gets a twinkle in his eye when he talks about golf? >> what a surprise. >> john paulson is snapping up bank stops stocks. so should you follow suit? >> we'll talk about that and maybe the correlation hasn't gone away between the dollar and the stocks. stocks are up. dollar is down against the euro. b
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on the currency markets, dollar is up against the yen today pt stocks are firmer, which suggests that we haven't broken down the correlation between the dollar and risk appetite. joining us is peter rosenstreich. peter, it's kind of interesting. last friday after the employment report, you might have thought that maybe america's growth was going to exceed that elsewhere and the dollar benefited on that. today, we get strong growth numbers. well, we get growth out of germany and france and now they're possibly out of recession before the united states. well, they are out of recession. so has that changed our thoughts
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from last friday on euro/dollar? >> absolutely. i think the decoupling or the decor lagz between the risk appetite trait after the knee jerk reaction in nonfarm payrolls put a spotlight to that correlation and the key factor was that the u.s. was going to come out of the recession out of the euro zone and therefore people could be going long dollars and the euro. what we saw today, very clearly, especially from germany is that perhaps the euro zone is not in as bad of shape as people had originally anticipated and in that case, the u.s. will be the be gaining against the euro and sort of negates much of the anticipation of sort of the decoupling. >> peter, this is christine. are you saying the japanese yen has peaked? >> yeah, i think so. i think that move was well, well
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overdone. the japanese economy is, in my mind, still underperforming and is not going to come out of the -- sort of the economic crisis as quickly as many of the other g10 countries specifically because of their export -- you know, sort of the destination for their ex ports. they need these developed countries to pull out. in that case, i think the currently market is going to be looking for opportunities to yield higher fuel traits trades and the yen is clearly one of those that they're going to use. >> peter, here is the question near term. we're going to get euro zone gdp in just a couple of minutes. then we're going to get retail sales and jobless claims. what do you do with the dollar? >> with the dollar, i think you need to anticipate that the risk appetite trade is untouched. the decor lagz trade that people have expected lated is not as clear cut as originally anticipated.
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you have to go back to selling dollars. we still see the repatriation and the risk appetite trade moving against the dollar. capital coming out of the u.s. people moving out of fixed incomes heavily. going to emerging markets, selling the dollar, we think that is going to be the near term trade. euro/dollar will be heading back up to the 44.70 and above levels. >> peter, what happens to sterling here? you've got growth in germany, the fed looking like they're not going to extend qe. but in the uk, they are. where does sterling go? >> right now i think terlg in terms of the e euro is going to be stuck in more of range against the dollar. you had the offsetting factors. one, like the u.s. and the uk economy is not coming out in our mind as quickly as possible. yes, we're seeing decent housing numbers but, you know, those are volatile figures. but the longer term is that the qe will erode the sterling and, you know, overall, we're seeing a pretty good pricing right now where the sterling is right now.
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>> peter, good to see you. where is your tip for the golf? tiger? >> play as much as possible and always bet on tiger. >> thanks for that, peter rosenstreich, from scm advanced currentsy markets. still to come, german growth and is french growth, as we said, came in with growth. that's the point. so we'll talk about what the recession ending in those countries means for investors. >> of course, we'll get through zone numbers in just a couple of minutes. plus we're going to get walmart results today. the retail giant accounts for 8 cents of every dollar spend in the u.s. when this hotel added aflac to compliment their benefits package
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aflac! it made a big splash with the employees yeaaaahhhh! find out more at aflac!... ...forbusiness.com (laughter)
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i'm christine tan in asia. risk appetite is back after the fed suggests the worst could be over for the world's number one economy. >> and i'm ross westgate in europe. the recession is over in germany and france. the eu number is due right now. >> and i'm bertha coombs. in the u.s., retail sector in the spotlight today as the government reports july sales and walmart posts second quarter results.
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growth today for germany and france have contracted. a big surprise, really, to everybody. nobody thought that. right now, we're going to get the composite number out for the euro zone and i can tell you that the estimate for euro zone composite as a whole, gdp is 0.1% on the quarter. so the euro zone as a whole is still in recession. but it's an awful lot better because of german/french numbers. growth for the region compared to this time last year, still 4.6% lower. nevertheless, 4.1% for the euro zone is where we stand. that second quarter reading is the strongest since 20 -- if i can pull it up, i just lost the note on that. but this is where we stand in terms of the euro/dollar, it's
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probably already priced in after the german and french numbers, 1.4259. there you go. ten-year bund yield nudging up to .49%. joining us with his thoughts, bob mckee, chief economist at independent strategy. growth, bob, where does it come from? >> let call it a bottoming of the german recession. the year on year figures are still down 7.1% over the year, which is an acceleration over the last quarter. but yes, a slight quarterly rise, which i think is interesting because if you look at the overall figures for private consumption, household consumption in germany and france, they've been pretty resilient. german households haven't had a housing price bubble, they haven't had to deleverage debt. both france and germany -- >> where has the boost come from? >> well, if you've got a pretty level playing field when it
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comes to consumption compared to the u.s. and the u.s., what are the other factors? the recession is being based on a huge collapse in ex ports and in capital investment which is still down on these quarterly figures and a big run down in inventories, which continues to have a negative effect on all the economies of the g7 at the moment. although we think in this quarter, that's going to be different. it's going to start coming down or slow down a bit more. what we've seen in these figures is simply the net trade has made a bigger contribution than expected. ex ports aren't down quite as much. we've seen a big pick up in ex ports in june is probably due to the moderating of the recession globally, which has allowed german ex ports to recovery a bit and that's bounced into those second quarter figures at the last minute, which is why people have been a bit surprised. what it tells me is that probably a mark at the bottom of the recession in europe and probably elsewhere for all of us is what sort of shape of recovery are we going to have
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moving on? >> don't give me any letters, bob. you can stay if you don't give me any letters. is that a deal sfp that's probably a deal. >> he's going to get it, isn't he, bertha? >> he's got to. i think we should start talking about it in terms of tone, a slob by recovery, a well toned recovery, a muscle-bound recovery. maybe that's the new parameter. we are seeing the futures here in the u.s. move up a little higher here on the back of that data coming out of europe. we've got right now the dow jones futures up nearly -- let's call it 80 points or so above fair value. nasdaq futures are moving higher, with as well. we will have a little bit of caution this morning because we will be getting retail sales out from the government. walmart will be reporting ahead of the opening bell. walmart does not give estimates, but we'll see if they are benefiting basically from a lot of folks trading down. we will have more debt issuance
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today, the third of a big week of auctions on the bonds today. the long bond, the 30-year bond, only about $15 billion. but there might be trepidation since the ten-year note auction yesterday does not go so well. but you've got to take ta with a grain of salt given that it happened an hour before the fed decision. the ten-year yield at this point at 3.74%. we may see pressure on bonds today with more appetite for risk giving that euro zone data that we just got particularly with germany and france. ross. >> global equities are responding to what we've seen on the growth figures and the fed yesterday. we're now up to the session high. the ftse cnbc global 300 is up 28 points, putting on a spur after that euro zone figure was minus 0.1%. the original forecast was 0.5%, but that was before we had the german and french numbers out. european stock markets two hours
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into the session, up about 1% now. xetra dax up is .6%. cac 40 up nearly 1%. on the smi, 0.8%. the dollar is well over 1.42 now against the euro. dollar/yen, 96.45. and more risk appetite pushing the pound back towards 1.66, christine. >> ross, here in asia, the upbeat comments coming from the fed giving markets a big boost. increasing risk appetite in terms of sectors. we have consumers doing well. in terms of markets, the nikkei 225 is up 0.8%. climbing back to the ten-month high level. the shanghai composite up 0.9%. late session bargain hunting managed earlier losses. and the bombay sensitive 30 index up 2.9%. in terms of oil, it is getting a bit of a boston from fed comments suggesting maybe, you
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know what? that could help out command in the oil sector. nymex light sweet crude is now up more than a buck now. $71.34. and brent, as well, should be tacking on gains in line with what's happening with nymex, up 98 cents, $74.39 a barrel. bertha. >> yeah. and we should see a fairly bullish reaction today, particularly in oil with france and germany now out of recession and the fed saying that the u.s. economy is leveling it out or leveling out, she's trying to say, thanks to some of those emergency measures and maybe the fed is now going to ease out of some of those emergency measures. let's bring back bob mckee, chief economist at independent strategy. bob, did the fed get it right yesterday? did they set the right tone? there were high expectations for that statement. >> i think they did. we got a picture from the fed which said, look, things are improving. we're beginning to see a bottom to the recession, but they're
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still very cautious. they are still concerned about how -- what the strength of the recovery will be. the consumer is still a big worry. unemployment, as we know, dropped a tiny bit on the official figures, but employment growth is going negative. consumers are spending less, considerably less than the last figures we had for june. that suggests that the fed is still concerned that any recovery is going to be fragile, so their need to provide support for the financial and credit markets to try and give some support to the economy as it tries to come out of the bottom of this recession. >> bob, the fed signaled it will wind down its bond purchasing program by the end of october. who is going to absorb this huge coming on to the market? >> china has continued to absorb quite a bit of it. it seems that the official purchases tend to be at the shorter end of the market and
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not at the long bond issue, which is the issue that will be a problem for u.s. treasury over the next year, that they got a lot of issuance in longer term maturities and the bonds are anybody interested in buying those when they're concerned about the futility of the recovery and the ability to finance that at the current interest rates, which are offered on the bonds, which suggests to me that we're going to continue to see an increase in ten-year and above bond yields as a result because the demand for that end of the curve is going to be weaker than it is at the short end. >> and bob, how does that play out, then, when you've got the situation in the euro zone where you've already got two economies that are now officially out of recession and the euro zone looking stronger. there's talk here that we might need another stimulus package, yet it seems as though the euro zone did their stimulus package
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correctly. asia, you could say did it correctly. >> that's not been the argument up to now. the uk and the u.s. would recover quicker. but when you consider the huge amount of debt that have been built, i don't think that's the case. how that got to unravel and be de-lev raenled over a period of time, that requires a lot of support from the government to avoid a much deeper recession than already the uk and the u.s. has had. so it's been a different picture there. that means that there's still more, in our view, more deleveraging to take place in the household and private sector and that makes it much more difficult for the uk and the u.s. to recover. that's not been the problem so much for the euro zone or for asia. they just need a recovery to some extent in global economic demand. and they're beginning to get
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that and that's shown in the results. but of course, the ultimate buyer of all german goods, japanese goods, asian goods, still remains on the whole the household sector in places like the uk and the u.s. and if they continue to be weak, don't expect a quick recovery for the euro zone, either. >> all right, bob, we're going to talk more about this. you're going to stay with us. bob mckee, chief economist, independent strategy. in other news, we're going to be looking at whether walmart can continue to win new budgetwise customers here in the u.s. and elsewhere. that's coming up after the break. we'll do a preview of the retail giant's second quarter results.
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welcome back to "worldwide exchange." walmart reports second quarter earnings. they are due out about 7:00 a.m. new york time. the retailer is forecast to earn about 86 cents a share. that would match year ago rultsd. analysts will account for falling food prices and tough comps last year whether consumer spending was boosted by tax rebate checks. wag mart is benefiting from bargain hunting shopper wes we believe. the stock, though, not benefiting from investors. july retail sales are due out at
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8:30 a.m. new york time. forecast to have risen by 0.8%. take out autos, sales are expected to have risen ju just 0.1%. eric beater is the senior viewpoint and retail analyst at breen, murray and karat. thanks so much for coming in early. bob mckee is still with us. eric, let's start with you. obviously, walmart, the big gorilla today. i know you don't cover them, per se. but as walmart goes, can we take anything out of that as far as how the consumer is doing? >> yeah. i mean, walmart, obviously, is the biggest consumer play in the u.s. i think what you're going to see is that the american consumer remains very strapped and they're continuing to trade down and i think walmart is going to benefit from that. q2 is probably the toughest comparison all retailers face this year. i think you'll see that from walmart in the next few hours. >> of course, this is the key
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back to school season. as much as people want to hear about july sales and what's going on, everybody wants to know how august is going. and the teen retailers in particular seem to have taken such a hit as consumers have traded down, such as abercrombie. they used to be always a recession proof, with you in this one, they've gotten hit. who is likely to benefit from back to school? >> as we talked about walmart being a back to school hit, aeropostale will be a big player here. until they feel better about unemployment, about their current economic situation, every dollar is going to be examined and thought about before it's spent. >> eric, it's ross here. how much discounting are we seeing through this? >> it's interesting. this historically is a full priced selling period right now, july and especially august. august is a crucial month.
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right now, we're seeing more discounting in august than they saw last year. and i think what's going on here is that we have almost reached a point where the american consumer has said, i'm not paying full price ever. it's almost expected that the new full price is at least 20% off. i think we'll see that now and in the holiday season that you will have to get into this new world of discounting before you start to sell product. >> eric, bob mckee in the studio here. so that probably means that margins in this sector are going to be really tight. and we know that everybody has been -- corporations in the u.s. have been trying to cut costs in order to keep their margins up. but if -- at least in value terms, sales continue to be very tight and possibly even falling, it's going to make it difficult to increase margins from here on. >> you know, it's interesting. i think on the selling period, that's correct. but internally, i think as you bought, there's going to be less stores open, there will be less
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people in the stores manning them. we have been able to see retailers take advantage of slacker times in asia to drive better pricing. so i think in the short-term, they'll even themselves out. so the question is, when we get out of this, will the retailers be able to grab any extra margin? and that's an issue that's going to weigh on us probably starting in 2010. >> eric, this is christine. given what you know, which retailers do you think will be a safe bet to put your money with? >> right now, if you look at what the market is doing, the market is ignoring q. you saw some of the results yesterday from macy's and other ones. you have to look at q2 and for names that are coming back. you have to look at names like true religion, aeropostale, turn around crews like j. crew. people look at it as more expensive. i think those are key names to look at for the second half and beyond for investors. >> j. crew does get that white
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house buzz. we'll see if that continues for them. thanks so much, eric. eric beater, senior viewpoint, retail analyst, breen, kerry and murray. >> bob mckee remains with us. citigroup has hired consultants to perform an in-depth review of the financial management. the move is spearheaded by the fdic. citi must present a plan of action on possible management changes to the board and regulators by the time it reports third quarter results in october. in frankfurt at this hour, citi shares are trading up 5%. but that may be in part because john paulson, the hedge fund manager has been making a bet on financial stocks, in his case, bank of america. citi and other can happen companies that have not yesterday repaid t.a.r.p. loans, including bank of america and aig must present executive pay plans to the pay czar. ken fineberg will have 60 days
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to review those proposals. ross. here in europe, gdp shrunk less than forecast in the second imparter of the euro zone. down 3.7% on the year versus expectations of a 5% contraction. the figure, of course, boosted by france and germany, which are returned to growth. they had a price 0.3% rise in their second quarter gdp figures. >> when it's news, videos, blogs, we're watching retailers, more signs of what the market will do, find it all at cnbc.com. >> and still to come, profits slump on the back of sluggish shipping ratsd and 3g mobile phone sales. we'll find out why the managing director is confident for a pick up in the second half.
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global equities are higher as we wait or the u.s. open later. starting off with a look at what's going on in london, james hughes. james, we seem to be getting towards the session highs. >> yeah, performing pretty well, of course, as these euro zone gdp numbers helps by the german and french numbers earlier this morning. adding to what we saw yesterday.
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the fed is giving everyone that little bit of optimism again, that maybe economic recovery is getting a little closer than what we first thought. there's a few stock stories moving things around today and we've more or less got the usual suspects moving things in terms of sectors. banks to the upside today as well as the miners and oil is pushing back through that $70 a barrel level. that's helping in terms of the heavyweight sectors in the uk moving to the upside. prudential, their numbers came out yesterday. these numbers just a sign of things better than expected for this company. they've hiked their dividend, as well. still, that one is really leading things higher yesterday. good result from those. thomas cook is one where the numbers have come in slightly better on the front of things. but still, this comment in there that swine flu throughout 2009 could cause the company around $20 million pounds. that's dragging on their share price today. >> thanks for that, james.
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that's the view in london. over to paris where stephane, i wonder whether everybody who might be on hold today might spend a little more knowing you're out of recession. >> that's the price of this morning. they're starting to spend more in the second quarter. the household consumer spend sg one of the reasons why the gdp group faster than expected, 0.3% higher in the second quarter. we were expecting a contraction of 0.3%. also there's a stimulus package for the economy on the strong ex ports, stronger than expected. that's the big surprise of this morning. and that's what is driving the french market today the cac 40 is up nearly 1% right now on the corporate side we've got also strong numbers from adp. the company posted almost a 6% rise in sales for the first half of the year. and that is despite the decline of 6.4% in passenger traffic. the company confirmed its outlook for mild revenue growth
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in 2009. air france klm is trading higher. also the banks on the final shore are in good shape today thanks to the growth. also, despite the comments made by budget minister eric vert who is calling for tighter regulation in the banking sector to make sure that the banks are lending enough money to companies and making sure that they are not paying too high bonuses to a small number of their employees. all the bank, as you can see, are in very good shape today. now let's have a look at the polish market with im in vassel. >> the trade on the stock exchange is supposed to start at a the quarter to noon. it was delayed today due to technical issues. there is a power outage on the warsaw stock exchange. sometimes there are problems with power, sometimes there are problems with the system, which is a french technology. it was bought in november 2000.
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since that time, the number of companies who listed mere in warsaw increased by nearly 70%. there were plans to replace that system with a newer one, but it didn't happen so far. it was just modernized. it was just upgraded. since that time, there's still a question whether the new investor would change their system because this was supposed to be sold this year. there are four main players which are buyers. there is deutsche borse, nasdaq euro next, there is also london stock exchange and new york stock exchange euro next. that's the situation right now at the warsaw stock exchange. now, let's move to nigel in singapore. >> thanks for that. we had a positive picture here in asia being helped by the positive comments from the fed. hong kong's best performance
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there fwb hang seng index up 2%. a lot of earnings coming out of the region. cuspy son, wanpoa, reporting a 3% drop in its first half net. 5.8 billion hong kong dollars is where they came in. it still beat forecasts. the main reason for the weakness there, less contribution from its ports as well as their oil operations. now, we just spoke to the managing director of hutchinson group. less than an hour ago, seems to be a lot more optimistic about the second half. and that's because they expect better performance from their 3g business. this is what he had to say. >> i think this year most of our unit will be break even. but however, whether all unit will come out this way, i still have to see. but next year, because if you see our subscriber base build up, every subscriber base build
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revenue so i am quite positive on that. >> a couple of other interesting comments that hutchinson made, they were saying they're considering a merger with three italia. they had a european venture, probably part of that. also you see the possibility of a shanghai listing, a comment being since a lot of hong kong based companies looking to list in china. on that note, back to bertha in the u.s. >> thanks very much, saijal. today it will be all about retail sales and walmart will be reporting ahead of the bell. but we've got other usual suspects on the calendar. it's thursday, so weekly jobless claims due out at 8:30 a.m. new york time. they're expected to have fallen by 550,000. also we'll get retail sales for july. then at 10:00, business inventories. in addition to walmart, we're
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going to get results today from dr. pepper snapple and retailers estee lauder and kohl's. that's your global stock watch. still to come, one in every 355 u.s. households face foreclosure in july. that's the highest monthly rate since 2005. just when will we see a bottom in the housing market?
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it is a little more than half past the hour. here are the top business stories from around the world. in the u.s., the retail sector front and center today as the government reports july sales and walmart posts second quarter results. >> and here in europe, second quarter gdp reports less than forecast as france and germany exits recession. >> here in asia, m&a in the resources sector.
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>> hello and welcome to "worldwide exchange." if you're just joining us in the u.s., futures are pointing to a higher start on the back of good data coming out of france and germany. as you heard ross say, they are out of recession officially, even if only weekly. we've got futures right now about 72 points above fair value as far as the dow, nasdaq and sps are higher. walmart will be a big factor in its earnings ahead of the bell and we'll get the weekly jobless claims which are a big focus. taking a look at the ten-year today, we have the third leg of this week's refunding measures, the auction today for the 0-year $15 billion. yesterday we did see the yield move up and we did see a disapointsing ten-year auction. you have to take that with a bit of a grain of salt that did come an hour before the fed decision been so a lot of folks may have just wanted to stay on the sidelines. we've got the yield here at 3.73%. ross, we may have yields moving
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higher because of risk appetite. >> absolutely. up to four quarters of contraction. today we saw in the second quarter growth in the third quarter for france and germany at 3.3%. if you look at where the german output is at the moment, it is still 7% below the output that we had this time last year, which shows you the recession that we've had there. but nevertheless, we didn't think we would get growth quarter on quarter, and we have. so that's boosted the stock market. up 1% on the ftse 100, 1.5% for the xetra dax and 0.9% fort cac 40. it means people have to rethink the dollar after last week's employment report when people decided the u.s. wag was going to recover quicker.
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today maybe that's been revised. dollar/yen, 96.29. euro/dollar, 1.4266. sterling/dollar, 176588. >> those upbeat comments from the fed gave markets here something to cheer about. a bit of a relief going on. the nikkei 225 is up 0.8% climbing -- pulling towards a 10-month high again and the kospi, marginally lower. the shanghai composite managed to recover from late losses, early losses to recovery higher, 0.9 peshs higher and the hang seng is up 2.1%, inching closely to the key 2,1,000 level and the bombay sensitive 30 index up 3.13%. a strong showing there. in terms of nymex light sweet crude, all this good news from germany and france as well as the u.s., nymex light sweet crude is tacking on gains, $71.67. and brent, as well, tacking on
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gains, trading around $74.74 a barrel. up $1.34. bertha. >> thanks very much, christine. euro zone gdp contracted less than forecast in the second quarter with germany and france returning to growth. in the u.s., fed chairman ben bernanke says the economy here is leveling out. so let's get a read on the current state of the global economy with pete vietkowski. he's joining us from cincinnati this morning. in lobbed, bob mckee, chief economist at independent strategy remains with us. pete, i want to start with you. so we are seeing some recovery here in europe, faster than expected, leveling off here in the u.s. and asia growing pretty fast by comparison. i wonder, though, a lot of this has come because of stimulus. are we stimulus dependent to keep this going?
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>> i think that we're somewhat stimulus dependent to keep this going. i think that's going to be the big question. the other big question that we've had so far this year is we had a big free fall in the beginning of the year and obviously going into the end of last year and the stimulus has allowed the inventories to start being built back up by businesses and that's kind of the recovery that we're seeing right now. so the big question is, can consumers and businesses, through spending and investing, continue and start the economy going on its own without the stimulus and the inventory buildup that we've been seeing so far? so it's really, you know, kind of passing the baton, if you will, and that's going to be important for the second half to get the stock markets across the world, you know, continuing into the second half. because they're anticipating that type of recovery right now. >> but they're anticipating a recovery of the consumer? when you say the consumer, you mean the u.s. consumer, right? because in asia, consumers are
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probably in better shape and have better balance sheets, but traditionally, they don't spend like we do here in the states. >> yeah, that's correct. it's definitely the u.s. consumer that continues to drive the world economy, becoming a little bit less dependent, the world economy is, on the u.s. consumer. but still, a huge piece of the world economy and you've got to get that consumer back in there. housing prices in the united states are going to be important here. although there have been some optimistic data points that we've seen so far. we believe that there's still a lot of shadow inventory out there, so there's a bit of a question to see, going into the second half of this if this can continue because the consumer is still seeing a lot of headwind out there. the other question we have is can ten-year rates stay as low? obviously, the fed is doing their part. they're keeping short rates anchored at a very low rate, obviously, zero to a quarter of a percent right now and that's very important. but the big thing will be can
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the government and the fed continue to buy those ten-year treasuries, keep those rates low, keep mortgage rates allow and allow the housing recovery to continue? >> bob, with that sort of uncertainty that pete is talking about, what do you do with your investment strategy? >> i think pete summed it up. i would getaway with him entirely. i'm not going to mention any alphabets about recovery. but as he says, normally in a recession you get a natural recovery, prices go down, people start spending and that starts to turn the economy back up. we've seen a big fall in mortgage payments in the uk and the u.s. if that continues, then maybe you'll get an actual recovery. i'm just concerned that this time you won't because the credit machine has been so badly damaged. >> they're buying today, they're adding to their risk today, are they wrong? >> i think they're probably premature. we don't see that an inventory pick up leads to the consumer recovery in a way that we naturally expected in a recession. this is going to be a long drawn
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out process with several bumps on the way. earnings estimates are way above what we get in terms of getting sales growth of the top line rather than continually cutting governments to try and improve margins. so i think there's far too much optimism about the strength of the recovery and that could see disappointment later in the year. our view is that equities, you don't really want to be plowing big into equities at the moment and probably not at the long end of the government bond market because of the points peter has made and so you've still got to play a fairly tight risk verse strategy looking at the short end of the bond market, looking at safer haven assets, particularly gold and to be concentrating on the defensive sectors of the equity market over the next six to 12 months. >> pete, what about you, christine here, do you like equities? we've seen oil spike because of the good numbers coming from france and germany and upbeat comments from the fed.
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do you like commodities. >> general? >> we do like commodities in general. we think there's supply constraints in the system. to any extent that you get any kind of demand, spike up that we're seeing now. china continues to stockpile commodities, so that's going to continue to support prices here. we think there may be some pullback, as we've been discussing here. in the second half, there may be a bit of a pullback there. obviously, driven again by the u.s. consumer and that type of demand. but overall, you're getting support from the emerging economies. there's plenty of supply constraints out there. suppliers have been extremely cautious in investing in new technologies and so forth and the miners have pulled back in all this. there's been a lot of flexibility shown out there. so we think that will continue to support commodity prices and we think commodities are good plays to hide, if you will, even if you do think there's going to be a second half pullback because they're participate in any subsequent move up in the
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stock markets and so forth. so we think they'll kind of perform through this volatile-type cycle i think we'll see over the next year or so. >> that's good to know. pete, we want you to continue staying with us. and bob, i would like to thank you for being with us today. for now, let's cross live to tokyo and check in on the trading day there with ken moriyasu from the nikkei. >> thanks, christine. trading here is low but tokyo stocks managed to regain 0.8% from yesterday. the overnight surge on wall street and the weaker yen in the 96 range against the dollar helped push up automobiles, airliners and steelmakers. the tokyo mel metropolitan government, furious at being downgraded by moody's investor service has canceled its contract with the rating agency. last month, moody's lowered its ratings on tokyo and 12 other local governments after some
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investors said that it was unusual that municipal bonds were ranked two nomps higher than local bonds. but the local governments called the move unilateral and justified. after all, they have been paying millions of yen to moody's in annual fees. meanwhile, tokyo power and takaoka electric have developed a game changer for electric cars. their device can fully charge an electric car in up to 30 minutes. up till now, the standard formula was to take five to ten hours charging the vehicle at night. that means if you forget to plug in the car the previous night, you can still catch up over breakfast. that was the nikkei business report. back to you, christine. >> that's good to know. ken moriyasu, thank you very much for that. >> i need one of those for my phone. i always forget to charge that. still to come, foreclosures hit another record high in july. we're going to have details after the break.
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welcome back to cnbc's "worldwide exchange." hedge fund manager johns paulson
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stocked up on shares of bank of america and other lenders during the second quarter. paulson's investment moves are closely watched after he was the one that predicted the implosion of the mortgage prices back in 2007 and the collapse of the banks last year. paulson owned 168 million shares of b of a as of june 30th. that's a nearly 2% stake. that makes him the company's fourth largest stockholder. >> in frankfurt, all of these potential stocks are trading to the upside. that portends for a bit of a boost here today. the s.e.c. plans to include options exchanges in its review of controversial flash orders. these the often get rationed a second before they're routed elsewhere. critics say that flash orderers give some traders an unfair advantage. last week, the nasdaq said they
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would volunteerly stop offering flash orders. realty track says foreclosure filings rose 7% in july versus june and we're up 32% from a year ago. one in every 355 households has now received some sort of notice such as a default or trustee sale. that's the highest monthly levels since realty track began publishing data more than four years ago. bank repossessions rose last month. nevada has the nation's highest foreclosure rate for the 31st straight month followed by california, arizona, florida and utah. >> and this just in, bertha, china's state owned young coal miner has agreed to buy resources. yeung soul will pay 18 per share
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in cash including special dividends to felix's last trading price. trading in yanzhou and felix were halted this i wouldn't week as the two finished the deal. it is said china should lift restrictions on imports and books a and films. china's current trading system for paup righted products violates international trade rules and the terms of china as sengz to the wto in 2001. the ruling marks a major step in efforts by u.s. entertainment companies to open up the chinese market and at the same time protect intellectual property rights. china defended its rules saying it may submit an appeal to the wto. >> just a reminder, we have growth back in certain countries in france, which has meant that the overall composite gdp for the country has had its best posting since last year.
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that's because we've had growth in france and germany, which both posted a 0.3% rise in their second quarter gdps. on that note, let's find out what's coming up in "squawk box" in just over ten minutes. joe is with us. there you go, joe. we've got some growth over here. >> have got some growth, that's good. and i see you're going with the pattern sole left-hand. we do that sometimes, with you we don't plan it. >> i should have lut you know, today. >> you should have, yes, the memo. let me tell but the two big topics that we have today for the "squawk box" and the nation. we have the pulse of the american consumer, which becky will be handling and america's health care crisis. we call it a crisis. that in and of itself has kind of a hidden meeting that we use now.
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it's a crisis. but i know 90% of people have insurance and are happy with it and get health care. >> prices are skyrocketing. >> town hall meetings are erupting with anger from citizens who have been stirred up. they don't really feel this way. our lineup includes former secretary of health and human services tommy thompson. former governor howard dean. former fda commissioner tommy got line, but we've got a big group ready to gives the real deal on health reform. and from your health to your spend, a big test from the american consumer today. numbers from retail walmart. it's been doing better during the recession. we'll see if it continues to do well if we recover. find identity which retail stocks have thrived during these times. government retail seams figures
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and jobless figures out today, as well. plus an exclusive interview with former fed governor randy krozar. he's the most recent member to leave the central bank and hopefully a squawk exclusive from time to time. he was there from the financial crisis. we'll be starting, ross, right at the top of the hour. keep the growth coming. we need to sell you guys some things and you need to -- what? >> i'd like that. i'm just trying to think of what it is you want to sell. anything in particular? >> we're the biggest manufacturer on the planet still. we still make some things. we call it made in america and we're proud of it sdmrp yeah, i just wondered if there was any particular product that you wanted to -- >> nope, nope. i certainly couldn't help your wardrobe. it's impeccable. >> okay. joe, i look forward to it. thank you. >> when we come back after the break, we're going to take a look at the day ahead on wall street.
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stay with us.
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let's have a look at the trading day ahead. pete, we're going to get walmart sales and retail sales at the open. what are you looking for? >> we think retail sales will hang in there. we're not sure at this point which way back to school is going to go. we've been cautious about it. going into the second half, the main thing that we continue to focus on are retailers' comments, with anything that trickles out. we'll be looking at the earnings today as far as that goes and retailers reporting today and seeing what stheer saying going into the second half and what they're seeing in the back to school season, first of all, and some of them have been planning, obviously, this early for christmas, what they're seeing there. everybody has been cautious going into christmas. we think that's probably the appropriate way to go. they're holding in margins. but if anybody can start driving a little more activity, a little bit more top line, we're going to see what's driving that. is it discounting?
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is it products? what's getting people into the stores? >> quickly, we have less than a minute left here on the program, what is going to be the key metric that you're going to look for? >> i would guess the key metric we're going to look for going forward are same-store sales. obviously, every earnings beat that we've seen so far has been a margin beat, a cost savings beat and what we're looking for is more traffic going across the boards. what we believe retailers will see and into the second half here is more of a die vergence between winners and losers. we think there will be market share tankers out there and a couple of those are amazon and kohl's and so forth. >> pete, i'm sorry to cut you off, but we are out of time. it's great having you here this morning. from all of us here as "worldwide exchange," have a great day.
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